Fintechs that do not integrate AI into their operating models will face increasing challenges in achieving successful exits, according to investment bank and tech advisory firm Artis Partners.
Embedded AI is becoming a crucial factor in enterprise software acquisitions, influencing how strategic buyers choose their targets, as noted by Victor Basta, managing partner at Artis Partners. He states, “Without a deeply embedded AI story, it will soon be nearly impossible for any digital-first business to succeed in securing an exit.”
Many strategic buyers, especially mid-market public companies and larger private equity-backed platforms, are focusing on acquiring businesses that have effectively embedded AI into their products and operational processes, Basta explains. “These companies may not present themselves as AI-driven. They don’t appear on any Gartner AI list. But that capability ‘under the hood’ is precisely what buyers are seeking. It’s about acquiring firms with strong customers, products, and domain expertise, along with built-in AI capabilities.”
This reflects a notable change from just a year ago, when AI-native model-builders and enterprise software companies were viewed as distinct market segments. Today, strategic buyers no longer differentiate these categories, as AI adoption quickly evolves to be driven by use cases rather than mere infrastructure. Furthermore, buyers are offering higher valuations based on how effectively companies have incorporated AI.
Recent transactions that Artis has advised on illustrate this trend. For instance, Ravelin Technology, which was acquired by Worldpay, utilizes embedded AI for merchant fraud detection. Additionally, diverse businesses such as digital mental health platforms and HR technologies are being acquired for their tailored AI capabilities. While neither of these examples identifies as AI-native, their embedded AI significantly enhances their strategic value.
“In a year or two, every software will incorporate AI, so the current factors influencing exit values will likely fade. However, for now, this distinction can make the difference between valuations of 100 and 200 for similar businesses,” Basta says. “Buyers are aware of this and are proactively working to cultivate internal capabilities.”